SSA Global Warns of Shortfall, Reduces Projections for Fiscal 2006

Published: March 2, 2006

by Timothy Prickett Morgan

Like other vendors of IT products that are based in the United States but which do a big portion of their business in the global market, ERP software powerhouse SSA Global is being hit by the strengthening of the U.S. dollar against foreign currencies. Last week, SSA said that its projected revenues for all of fiscal 2006 would take a $14 million hit because of currency exchange rate changes. But other factors in the market caused SSA to lower its projections for the fiscal year ended July 31 from between $780 million to $800 million down to $755 million to $765 million. The total shortfall that SSA is projecting for the fiscal 2006 year ranges from $25 million to $35 million, which is still quite a bit bigger than the $14 million in unexpected currency effects.

SSA, which is once again a public company, warned Wall Street of the coming shortfall, but did not say what the cause was beyond the currency effects. SSA did say that its preliminary estimates of ERP software license revenue for the third fiscal quarter were $57 million, up 12 percent, and support revenue of $91 million, up 5 percent. Services and other revenues came in flat at $40 million, and the company said that hardware sales related to its ERP solutions were the culprit. Total sales for the third fiscal quarter are expected to be around $188 million.